Jumpline magazine January 2024 - Flipbook - Page 25
Financial Alternatives
Mark Buckley, Ret.
25
The BIG Decision:
Pension Plan or Investment Plan
I remember when I joined MDFR we
were taken into a room at the Union Hall
and told to sign papers for our retirement.
I can say most of us didn’t really grasp the decisions we were
making nor the importance behind them. The decision to enroll
in either the FRS Pension Plan or the Investment Plan was a little
daunting but, most deferred to the Pension Plan because that’s
what most of us had assumed was the best choice. If we had
been able to really have a true evaluation of these plans, maybe
we would have chosen differently. Who knows? I will try to explain the differences and importance of those decisions, not only
for new recruits but, ultimately for new retirees.
Let’s look at the choices. The Pension Plan is managed by the
state and includes contributions from both the employer and employee. When we retire, those contributions are paid to the employee monthly as an “annuity” for the rest of our lives. It has a
built-in cost of living adjustment as well. The advantage of this
plan is that it’s professionally managed by the Florida Retirement
System (FRS). For the three, 昀椀ve and ten years ended on June
30, the pension fund returned an annualized net of 9.3%, 7.4%
and 8% respectively, above the respective benchmarks of 8.1%,
6.6% and 7.2%. FRS returned a net of 7.5% for the 昀椀scal year
ended June 30, 2023. The Pension fund had returned a net -6.3%
for the 昀椀scal year ended on June 30, 2022. I mention these numbers because they give you an idea of how it’s expected to perform.
The Investment Plan gives YOU, the employee, the ability to
“manage” this money that would otherwise be managed by FRS.
The employee is offered a series of mutual funds to choose from
to invest in the market. There is also a way to manage this money which gives you total control to buy mutual funds and equities
called the Self Directed Account. It’s important to understand that
YOU have control of this money. Whether you are a new recruit
or preparing for retirement, these choices will determine how your
retirement bene昀椀t will be paid out. On the one hand, if you aren’t
so much into managing your money, the Pension Plan is a better
choice because it already has professional managers. On the
other hand, if you have 昀椀nancial knowledge and savvy, then the
Investment Plan can be a better route.
I have clients that outperformed the Pension Plan with their
investment choices and others who are not happy at all about
their choices and wish they had selected the Pension Plan.
In summary, you will elect the lifetime annuity that the Pension
Plan offers, or you can take the lump sum and distribute it out
in any way you choose. I’m not here to tell you which one to
choose, but merely to explain the differences. Of course, everyone has different goals and timelines so it’s important to sit down
with a quali昀椀ed investment advisor to review the advantages and
disadvantages. If you aren’t sure or are close to retirement and
it is decision time, reach out to me. There are ways to help you
decide which direction to go. Stay safe out there!
Mark Buckley, Ret. MDFR Prudential Advisors Tel. 305 608 2690
RETIREMENT PLANNING: BECAUSE YOU CAN’T BE
A MIAMI-DADE COUNTY FIREFIGHTER FOREVER.
A Prudential Advisors Financial Professional can assess your situation, develop a strategy, and help you build
a secure future. To learn more, call me today.
MARK BUCKLEY
Financial Professional, Prudential Advisors
GREATER FLORIDA FINANCIAL GROUP
The Prudential Insurance Company of America
5355 Town Center Road
Suite 704
Boca Raton, FL 33486-1068
Phone 305-608-2690
Fax 877-840-0082
mark.buckley@prudential.com
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Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries.
Life insurance is issued by The Prudential Insurance Company of America, Newark, NJ and its affiliates. Securities products and services are offered through Pruco Securities, LLC
(Pruco)(Member SIPC). Each is a Prudential Financial company located in Newark, NJ and is solely responsible for its own financial condition and contractual obligations.
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January 2024 | JUMPLINE Magazine
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